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Old 11-13-2010, 11:13 PM
 
31 posts, read 73,899 times
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I recently made an offer on a Fannie Mae Property and the seller accepted our offer. In review of the purchase agreement, we noted that in the Addendum, it states that "the buyer is aware of the 3.5% Fannie Mae credit promotion and have declined to make the offer more competitive". When we questioned our agent, he said he was aware of it but didn't put it in to make our offer sounds better. I was a little put off since we increased our offer to match the listing price and according to the listing agent's web site, we were the only one that had made offer to the property so there is no need to make it more attractive.

I told my agent that we can really use the 3.5% credit to help our closing costs and since we are not aware of the promotion, we'd like to mark up the purchase agreement to reflect our intent to accept instead of declining the credit. Our agent told us that we can't do that since the seller will just put it back to the market. As we are not aware of the promotion and we are paying full price, I think it is our decision, not his to decline the 3.5%. I still want to mark up the agreement and the seller can choose to put it back to the market. However, I would appreciate some advice to see if this is a legitimate process to mark up the purchase agreement or put an addendum to it at this point of the transaction.
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Old 11-13-2010, 11:33 PM
 
28,461 posts, read 78,568,953 times
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Default What "point in the transaxtion" do you think you are at???

Ypu made an offer. The seller has accepted the offer.if you have also exchanged earnest money and that has nee accepted than in technical terms the deal probably cannot be renegotiated.

Now the details of why your agent did not believe it was in your interest to male an offer at a lower price and / or with the credit promotion probably depend very much on local conditions andnthe pricing of the home. My hunch is that not only do you risk the seller puttingmthe home back on the market but you risk being tied up in court -- an angry enough might bring a suit for specific performance against you...

Granted if you are 100% sure that this house is not priced aggressively enough, and no one else is going to make any offers and the property will continue to sit through the holidays (which short of having some super natural a abilities I think is not going to happen) and the seller will not react in a negative way (which is similarly unknowable) then don't listen to your agent...
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Old 11-14-2010, 01:25 AM
 
31 posts, read 73,899 times
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I am in the process of reviewing the contract. I have not signed the purchase agreement or put in any earnest deposit money. The Fannie Mae purchase addendum is many pages long and I've reading it very carefully before signing it. So far I have a lot of problems with it:
1) It states that this property will be my primary residence but in fact, this will be just my vacation home. I don't even work in that state. I had let my agent know that it is only a 2nd home.

2) It states that I have to conduct a home inspection within 10 days of "acknowledgement date" which they said is 11/8. I didn't even get the contract for review until last Friday 11/13 3:00pm. Given their snail pace, they won't even sign the contract for another week. So I am supposed to conduct a home inspection without them even signing the contract.

3) It states that I have to get a loan application within 5 days of the acknowledgement date, which by the way is already past due.

4) It states that we have to close by 12/13. We accepted based on the notion that they'll be responsive. I can't apply for a loan without a signed contract by them and it doesn't seem it'll be happening next week. My lender told me that there is no way that they can close by 12/13 if that is the case. I also understand if I can't close by 12/13, I'll be penalized per day by per diam even though this is not my fault.

5) It states Fannie Mae is tax exempted so now I have to also pay for transfer tax. This is not even disclosed to us by our agent. In addition, since he was kind enough to decline the 3.5% credit promotion w/o consulting us, now we are stuck with even higher closing cost.

We really like the property but we are not that desperate. This contract seems like a sure thing to fail for us.
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Old 11-14-2010, 07:06 AM
 
Location: Austin
7,238 posts, read 19,969,627 times
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The contract you're reading is a standard contract. As you start to mark it up, it's going to get rejected and they will have to create a new one, however, they're not going to take out their main language of usual terms. The only thing you might have a leg to stand on is the closing costs issue, however, with it being a second home and not a primary residence, they might just turn their nose up at that one too...

When you submitted your offer, I'm sure there is no place on your original offer than asks primary or secondary home. It probably says something about "buyer intends to occupy property." That makes the lender assume primary residence, so not your agent's fault for their assumption.
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Old 11-14-2010, 07:12 AM
 
Location: Cary, NC
39,011 posts, read 67,577,975 times
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1. Can you mark it up?
Sure you can.

2. Will your mark up bind the sellers?
Probably not.

3. Will you get the property under contract with your mark ups intact?
I predict not.
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Old 11-14-2010, 08:14 AM
 
28,461 posts, read 78,568,953 times
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Default Curious...

As someone that has never personally purchased a vacation home directly I kind of assumed that folks that did so would have substantial financial reserves / flexibility.

I would suggest that if you do not have the ability to accept the higher rate that goes along with non- primary residence and the overall cost structure involved in insuring / maintaining a vacation property this is not the best time to jump into that pit...
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Old 11-14-2010, 08:28 AM
 
31 posts, read 73,899 times
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Thanks a lot for the response.

It is not a question of whether it is the agent's fault or simply a mis-understanding. The major question is whether I should sign the contract as is. Besides all the quirks of their standard verbage, one of the major problems that I see in this contract is it is not our intent to occupy this property as our primary residence. Besides the addendum, they also included an owner occupant certification which requires us to certify that we intend to occupy, establish and use the property as "my primary residence". Our agent had signed the certification and it is now awaiting for our signataure. While we fully intend this to be an "owner occupant property" as a second home, this is not going to be a primary residence. If we sign the contract the way it is, will this consider false certification? If we do not sign it, can we amend it using an addendum?

I do not mind the higher rate associated with the 2nd home since we fully expected it. I had already disclosed this to my potential lender and the rate and points are not too different from the primary residence.
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Old 11-14-2010, 09:07 AM
 
Location: Austin
7,238 posts, read 19,969,627 times
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The bank will want to modify their own paperwork, so just let them know it's not primary residence and they'll make the corrections. Banks don't typically acknowledge state addendums, only their own.
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Old 11-14-2010, 11:01 PM
 
31 posts, read 73,899 times
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Thanks again for all the feedback.

I talked to my agent and we added an addendum to reflect the following amendment:
1) Change the intent from primary residence to 2nd home.
2) Change closing date from 12/13 to 30 days after both parties sign the contract.
3) Change home inspection and finanical commitment to be completed from a required period after the "verbal acknowledgement date" to "date after both parties sign the contract".

Since the original contract is not written in a manner that will protect our rights as buyers, we decide to walk away from this property if Fannie Mae will not sign the amendment. We are not asking more from them, just the typical terms that are usually offered by other sellers. Even though we really like the property, there are plenty of others around and there is absolutely no reason for us to enter a contract that will potentially cause us many heartaches and finanical problems in the future.
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Old 11-15-2010, 12:07 AM
 
Location: Columbia, SC
10,217 posts, read 19,956,176 times
Reputation: 9017
Get ready to walk away then. I think Mike nailed it. They really don't care if you buy the home or not and they typically don't accept contract changes. They aren't buyer friendly but that's just something you have to accept as a greater risk when buying.

You did need to change your "primary" to "second" home. Fannie makes you sign a doc at closing that it is, and the lender probably will also.
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